You are here

Oil fell below US$49 a barrel on Tuesday, giving up part of August's strong rally, as signs of rising supply outweighed hopes that producing nations will agree steps to support prices.

PHOTO: REUTERS

[LONDON] Oil fell below US$49 a barrel on Tuesday, giving up part of August's strong rally, as signs of rising supply outweighed hopes that producing nations will agree steps to support prices.

A Nigerian militant group, which has claimed a wave of attacks on oil facilities, said at the weekend it was ready for a ceasefire and Iraq resumed pumping through a northern pipeline halted earlier this year.

Brent crude was down 41 cents at US$48.75 a barrel at 1103 GMT. The global benchmark rallied 20 per cent between the beginning of the month and Aug 19. US crude was down 37 cents at US$47.04.

"Today we remain bearish on crude oil," said Georgi Slavov, analyst at Marex Spectron. "Supply looks likely to increase in the short term."

Market voices on:

Goldman Sachs, in a report, said talk of an output freeze by the Organization of the Petroleum Exporting Countries and a weak dollar had helped drive prices up this month but neither was enough to sustain current levels.

Oil prices have more than halved from mid-2014 due to a global supply glut.

Raising hopes that producers could revive efforts to tackle excess supply, Saudi Arabia's Energy Minister Khalid al-Falih said on Aug 11 Opec and non-members will discuss the market next month including any action that may be needed.

The International Energy Forum, which groups producers and consumers, is due to meet on Sept 26-28 in Algiers.

A previous attempt by producers to freeze output collapsed in April on tensions between Iran and Saudi Arabia and the refusal of some countries to join. Analysts remain sceptical concrete action will result this time.

"We see too many headwinds and logistical challenges to a meaningful deal," Morgan Stanley said in a report.

In focus later on Tuesday will be the first of this week's reports on US inventories, which analysts expect will show a decline in crude and gasoline stocks.

The American Petroleum Institute, an industry group, is scheduled to release its data at 2030 GMT, while the government's supply report is due on Wednesday.

Investors are also looking for clues on whether the US Federal Reserve will raise interest rates this year. Fed Chair Janet Yellen will give a speech at a global central banking conference in Jackson Hole, Wyoming, on Friday.